Friday Dump Complete: Moody's Warns Of Spanish Downgrade, Threatens AAA-Countries In Case Of Grexit

First we got Spain miraculously announcing late at night local time, but certainly after close of market US time, that the bailout so many algorithms had taken for granted in ramping stocks into the close may not be coming, because, picture this, Germany may have conditions when bailing the broke country's banks out, and Spain is just not cool with that, and now, after the close of FX and futures trading, we get Moody's giving us the warning the after Egan-Jones, S&P, and Fitch, it is now its turn to cut the Spanish A3 rating."As Spain moves closer to the need for direct external support from its European partners, the increased risk to the country's creditors may prompt further rating actions. The official estimates of recapitalising Spain's banking system have risen significantly and the country's indirect reliance on European Central Bank (ECB) funding via its banks has been growing. Moody's is assessing the implications of these increased pressures and will take any rating actions necessary to reflect the risk to Spanish government creditors. Moody's rating on Spain is currently A3 with a negative outlook." Moody's also warns, what everyone has known for about 2 years now, that Italy could be next: "However, Spain's banking problem is largely specific to the country and is not likely to be a major source of contagion to other euro area countries, except for Italy, which likewise has a growing funding reliance on the ECB through its banks." Of course none of this is unexpected. What will be, however, to the market, is when all 3 rating agencies have Spain at BBB+ or below, which as ZH first pointed out at the end of April will result in a 5% increase in repo haircuts on Spanish Government Bonds, resulting in yet another epic collateral squeeze for the country which already is forced to pledge Spiderman towels to the central bank.
 


"Material Banknote Order Reinstated"

"Fortress Paper Ltd. announces that its wholly-owned subsidiary, Landqart AG, a leading manufacturer of banknote and security papers, has had a material banknote order reinstated. This order was unexpectedly suspended in the fourth quarter of 2011 which negatively impacted the financial results of Landqart's operations in the first half of 2012."





New and Improved...Now with 100% more "Hope and Change"...

Obama Comes Clean

In a strange coincidence, President Obama, as reported by Bloomberg, just followed Mario Monti's new normal and 'came clean' about the real state of the economy, following his earlier snafu:
*OBAMA SAYS `ABSOLUTELY CLEAR' ECONOMY NOT FINE, AP SAYS
*AP SAYS OBAMA SEEKS TO CLARIFY PRIVATE SECTOR REMARKS
The President went on to say that he knows the economy "needs to be strengthened" while clinging to his basic belief that there has been some momentum. Is 'truth' the new 'lie'? Or did hope and change just change on less hope?

And Promptly Coming Right After The Market Close...

... is the news (which is not news, because as we had explicitly stated early this morning, Spain admitting it needs a bailout absent a new bailout plan in place, launches the country's bond yields into hyperspace) that had it hit 30 minute ago would have sent everything red for the day:

• Spain Resisting Conditions On Bank Bailout - EU Official, BBG
  

But why would this news, coming at nearly 11pm Spanish tim, have to come before the market close, when all of the day's gains would have been undone. Why indeed.

Monti Goes M.A.D.; Sees "Permanent Risk Of Contagion In Euro-Zone"

We can only assume that the technocrat-in-chief of Italy, Mario Monti, has read the second chapter of 'how to be a European leader' as he switches from Juncker's "When it's bad, you have to lie" mantra to "Maybe the real truth will scare 'em into it" as he pushes the spending of other people's money and a growth agenda (which of course will solve all the insolvency problems). As Bloomberg reports, the blackmail negotiations threats continue:
*MONTI SAYS THERE IS PERMANENT RISK OF CONTAGION IN EURO ZONE
*MONTI SAYS SPAIN BEING DEALT WITH PROMPTLY, ADEQUATELY
*MONTI SAYS EU NEEDS GROWTH POLICIES QUICKLY TO STOP CONTAGION
*MONTI SAYS MARKETS DEMANDING EUROPEAN GROWTH
Perhaps he just noticed the underperformance of Italian bonds the last day or two and just how this will rapidly spill back into his back-yard.

Gold Daily and Silver Weekly Charts - Monkey Shines

Obama's Arrogance And Ignorance

Dave in Denver at The Golden Truth - 1 hour ago

*Obama says U.S. has tried not to scold Europe* - headline on Marketwatch.com I'm not really sure why Obama thinks he has a right to "scold" Europe. Scold Europe over what? Over trying to politically manage the kind of systemic problems that are multiples worse/bigger in the United States? How about Obama warning Greece to not leave the Euro zone? LINK Where does Obama feel like he has right exhibit hubris like this? Is this the sense of entitlement one subsumes as being an extensive life-long beneficiary of affirmative action? What Obama fails to understand is that ma... more » 

 

SP 500 and NDX Futures Daily Charts - Looking For Mr. Goodbar

Weekend Thoughts and Charts

Eric De Groot at Eric De Groot - 3 hours ago

Thoughts and charts to mull over the weekend: Ignore the machinations intended to divert and misdirect because nothing has changed. The charts below tell us that the sovereign debt crisis, similar to 1933, is beginning to widen and intensify. Barring the resurrection of Herbert Hoover, QE to infinite is assured. Chart 1: Gross Domestic Product (GDP) to Total Credit Market Debt (TCMD)... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Stocks Have Biggest Week Of The Year On Lowest Volume

The S&P 500 gained over 3.5% this week (with a dip-and-rip today on dismal volume). This is the best week of the year amid the lowest volume of the year (ex-holiday weeks). Gold, Stocks, Treasury yields, and the USD all recoupled from last Friday's decoupling and limped higher, ending at the top of the day's range today. Financials and Tech outperformed - up over 1.1% - with the majors best as financials won on the week +4.8%. Treasuries close to close were dull but intraday saw rather notable vol as 30Y yields dropped over 10bps before round-tripping back to its high yields of the day. All-in-all, broad risk assets did leak higher today but nothing like as exuberantly as stocks which was somewhat surprising into a weekend likely full of equity dilution for Spanish banks (and more burden for Spain) - or none at all. The USD rallied into the European close and sold off after for the fifth day in a row. HYG outran stocks on the day and maintained the bid (ES closed at overnight highs) but IG and HY credit lagged on the day - though are al better on the week. Cross asset-class correlations dropped notably into the close, as implied correlation dropped and VIX was very stable given the rally into the close, holding above 21% - even as S&P 500 e-mini futures ended the day more than 2 sigma above VWAP (as we suspect futures roll effects kept some out into the weekend). Lastly, this push higher today in stocks saw a major drop in average trade size - certainly not offering the kind of follow through to yesterday's (or the week's) gains that one would expect on a new bull leg.

Friday Humor: Eurogroup Meeting Preview Redux

Moments ago the following headline flashed across the Bloomberg terminal:

• Sentiment Improves Ahead of Weekend Eurogroup Meeting

All one can do here is laugh - we can discuss how this is simply the latest idiotic case of perpetual deja vu, where a broke continent sits down, orders catering service, only to realizes it is broker than before, but not before scheduling its next meeting, while Jean-Claude Juncker utters some more lies... or we can simply once again present David Einhorn's brilliant summation of the sequence of motions that the USS Troikatanic goes through every single time as it achieves absolutely nothing.

Presenting the CBO's 'Long-Term Outlook' Infographic

When you hear two politicians in the US going toe to toe arguing about public finances (i.e. money that isn’t theirs), they’ll often cite numbers published by the Congressional Budget Office (CBO). In political circles, the CBO is considered an honest broker - an objective referee that simply presents the facts without taking a position on the numbers. Today they’ve released an infographic showing America’s debt to GDP ratio over the last 100-years, through World War I, the Great Depression, World War II, the Nixon Gold shock, and the Global Financial Crisis. For what it’s worth, both of the CBO’s scenarios for future debt growth seem absurd  underpinned by an even larger assumption– that the status quo is maintained, i.e. the United States remains the world’s most powerful economic force, can print currency at will without consequence, and can inspire foreigners to buy Treasuries. Rather than relying on some bureaucrat, though, history is really the best indicator for what will happen in the future. It may not repeat, but it’ll certainly rhyme. And history shows that the long-term likelihood is financial repression, severe inflation, and/or default.

Biderman: "We Are In The First Quarter Of The Next Recession"

Rick Davis of The Consumer Metrics Institute plays Clark Kent to Charles Biderman's Superman as the two dig into the latest GDP data. Critically, they break down the components and using inflation levels (CPI-U or The BPP) that make some sense Davis and Biderman are "really worried" that the real economy appears to be in a contractionary state if inflation is adjusted for correctly. Even the anemic BEA's 1.88% growth rate is 'very very poor' for an economy that is supposed to be 3 years into a recovery. The per-capita income (the money available to all households to spend) actually shrank - even using the BEA's inflation data. This juxtaposes shrinking household disposable income with a real economy supposedly growing (though slowly) which was driven almost exclusively by consumer spending - leaving Davis and Biderman questioning 'where this money is coming from?'. The simple answer is the savings rate has plunged, freeing up over $200bn in annual spending (and student loans have added another $100bn, refis $50bn, and strategic defaults $80bn) - all unsustainable one-time increases. Spending is not coming from income. Davis concludes that the BEA is notoriously bad at calling turning points (only getting the Great Recession 'direction' correct after 16 months and magnitude after 40 months) - leaving him of the opinion that we may well be in the first quarter of the next recession.

Brodsky On "Gold Monetization And The Big Reset"

"The global banking system is functionally insolvent and will fail without exogenous policy action" is how QBAMCO's Paul Brodsky begins his latest treatise noting that asset monetization (and in, particular, gold monetization) would solve many more problems than it would create. The negatives would merely recognize the balance sheet damage already done and beginning to be manifest (first, in the private sector and now, increasingly in the public sector). The global economy is threatened because, in real terms, it continues to misallocate capital and rolling unfunded debts and debating in the political sphere over the merits and risks of unfunded growth or policy-administered national austerity programs is a futile endeavor. The math suggests strongly neither can work. Brodsky is convinced policy-administered asset monetization would stop the global financial system from seizing, restore sorely needed economic balance, and reset commercial incentives so that real growth can once again gain traction.

The Buck Stops Where? – Obama Blames Europe for US Economic Problems

from RTAmerica:

On Friday, President Obama gave a speech on the state of the US economy. Significant parts of his address, however, were dedicated to Europe. President Obama blamed the Euro crisis on many difficulties America is facing now. Is this fair that five months before the election, Obama is trying to shift the blame for the poor economic data overseas? Former Reagan administration official Dr. Paul Craig Roberts joins Abby Martin to discuss it.

 

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Eric Sprott: THE SILVER CARTELS HAVE CHANGED THEIR M.O.

from Silver Doctors:
The Doc sat down with Sprott Asset Management’s Eric Sprott this weekend to discuss the European debt contagion, the latest gold and silver massacre, the massive rush into physical metals, and his outlook on gold and silver for the rest of 2012 and beyond.
This is a portion of Eric’s thoughts regarding Thursday’s smash in the metals and the crisis in Spain coming to a head.
When asked whether Thursday’s gold and silver raid coinciding with Bernanke’s testimony to Congress felt like Deja-Vu to the Leap Day Massacre Eric responded:
It might be that the silver cartels have changed their MO. The MO used to be that whenever the jobs number came out they’d go to work, which let them take a shot at the markets once a month.
The last jobs report backfired, and of course the jobs reports have been so poor. I think the key thing for the cartel is to time it, and to know when to do it. Three or four guys acting together can have a bigger impact if you all know exactly what second we’re going to do something.
Read More @ SilverDoctors.com

Thump … Thump … Disastrous Financial Tax One Step Closer

from The Daily Bell:
German parties strike deal on financial market tax … The German government and the main opposition parties have agreed on the principles of a tax on financial market transactions. The deal is essential for German parliamentary approval of the EU fiscal compact. The accord has been thrashed out in a joint working group made up of the conservative-led centre-right government and the opposition Social Democratic Party (SPD) as well as the Green Party. According to SPD chairman Sigmar Gabriel, the compromise was based on an EU Commission proposal for a financial transaction tax, and marked a complete “180 degrees” U-turn in the position of the government. – DW
Dominant Social Theme: This is necessary for Europe to survive.
Free-Market Analysis: The big news in Europe is not the implosion of the euro but the steadily advancing financial market tax. This is a tax on financial transactions and it will constitute the biggest single intrusion into private affairs since, well … the income tax.
Read More @ TheDailyBell.com

Developing: Nuclear Cover-Up? Extreme Radiation Levels Prompt EPA Censorship, DHS Hazmat Team

by Anthony Gucciardi, Infowars:
In a developing story that is raising concerns over a potential nuclear cover-up by the EPA, alarming amounts of radiation were reported near the border of Indiana and Michigan and later censored by the EPA online geiger tool.  The readings, which were captured in a screenshot, measured as high as 7.139 counts per minute (CPM). This is particularly startling, as the normal radiation levels are generally between 5 and 6 CPM. Sources say that a Department of Homeland Security hazmat team has now been dispatched after ‘years’ of inactivity.
A number of community reports have came in on the subject in fact, with readers of community boards and concerned citizens offering up some interesting and intriguing information regarding the potential radiation cover-up. Discussion over the information first began to surface on internet boards like Reddit and user-submitted news source Digital Journal. In the Reddit submission, which ultimately reached thousands of comments — many from those in the area who had contacted radiation monitoring stations and other affiliated individuals — and brought some further information to light.
Read More @ Infowars.com

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10 Tips to Help Guarantee You Have Food When the SHTF

by Gaye Levy, The Daily Sheeple:

Some of the most popular Web articles on emergency preparedness have to do with food. This is also a widely discussed topic in print and on forums. And it is no wonder. In today’s society eating is no longer just for sustenance. It is a social form, a source of family bonding and togetherness; and, for many, a hobby. And, with rising costs, it is a significant part of almost everyone’s household budget. Today I would like to share ten tips for securing your food supply so that in the event of a natural disaster, a terrorist attack, or civil disobedience on a massive scale, you will be able to eat and to thrive – no matter what.

Protecting Your Food Supply – No Matter What Happens
1. Grow your own food. This sounds so simple yet few actually do it. There are lots of excuses: not enough room, not enough sunlight, don’t know how and so on. Well I say get over it. Whether you have a backyard area, a raised garden, or a few pots on the deck, with a little bit of work you can grow something. Try using edible plants in your landscape, or how about some fruit trees or an herb garden?
Read More @ TheDailySheeple.com

Gold slumps and central bank double speak

by Ben Traynor , MineWeb.com
Ben Traynor says there remains a significant chance we will yet see more Fed QE. But things may need to get quite a bit worse first.

SIX DAYS after they climbed back above $1600 an ounce, gold prices dropped below that level on Thursday, as Federal Reserve chairman Ben Bernanke appeared before Congress at the Joint Economic Committee.
This is not the first time we’ve seen this. Back on February 29, gold fell $100 an ounce while Bernanke was testifying before the House Financial Services Committee. What on earth is the man saying to have such an adverse impact on gold prices?
Well, on the two occasions cited above, it wasn’t what he said, but what he failed to say that did the damage. In short, Bernanke failed to make any explicit promises of further Fed quantitative easing.
Read More @ MineWeb.com

Wealth Inequality: Where Does All the Money Go?

By Bill Bonner, Daily Reckoning:

The 1%…the zombies…and the rest of us…
Markets are counting on their hero, Mr. Benjamin S. Bernanke, to come to the rescue. They can practically hear the printing presses warming up…and smell the fresh $100 bills rolling off.
And where does all the money go? Long time passing…
Where does all the money go? Long time ago…
Where does all the money go? Gone to rich people every one…
When will they ever learn? Oh when will they ever learn?
But nobody seems to make the connection. Only here at The Daily Reckoning will we give it to you straight:
The working classes made substantial gains until the 1970s. Then, wages went flat for the next 40 years.
Wealth was shared out fairly evenly too…until the 1970s. From Wikipedia:
Read More @ DailyReckoning.com.au

The euro’s ‘guilty men’ are now steering Europe to catastrophe

By Peter Oborne, The Telegraph:
More than six months have passed since Frances Weaver and I published our pamphlet, Guilty Men, identifying those financiers, politicians and propagandists who advocated the creation of the European single currency 15 years ago, and exposing the dishonest or even brutal methods they used.
Our pamphlet was not an exercise in academic point-scoring. As Winston Churchill told the House of Commons, in the context of appeasement in 1936: “The use of recriminating about the past is to enforce effective action at the present.” Our task was no less ambitious. We wanted to silence and, if possible, to shame those voices in British and European public life who have been responsible for the tragedy of the euro, and therefore enable the resurrection of sensible and humane economic policies.
Read More @ Telegraph.co.uk

London Trader – Staggering 515 Tons of Gold Sold in 4 Hours

from KingWorldNews:

With many global investors still rattled by the recent price action of gold and silver, today King World News interviewed the “London Trader” to get his take on these markets. The source told KWN that not only was a shocking amount of paper gold sold in just 4 hours yesterday, but it was also confirmed that the mainstream media is not reporting the staggering amount of physical gold that has actually been purchased by China recently. Here is what the source had to say: “China has purchased hundreds of tons of gold in the last couple of months. China is not disclosing what their true reserves are. Russia is delaying disclosure and so is Iran. We saw record gold imports of over 100 tons through Hong Kong to China in April, as reported by the mainstream media, but what has been reported is just the tip of the iceberg.”
“What we’ve seen is a dramatic acceleration of physical gold purchases as the price has been drawn down. Staggering amounts of physical gold are being purchased. The acceleration of physical purchases, at these lower levels, is the reason why gold has been holding firm and building such a nice base.
The London Trader continues @ KingWorldNews.com

Gold Divergence from Equities is about to End

from John Galt FLA:
On my radio program of June 6, 2012 I pointed out how gold has been leading the equity markets. In this commentary, I shall show how the two divergences from 2007 to this year will end and result in a short term collapse in stock prices. First, let’s review the chart of the S&P 500 versus the GLD ETF from 2007 to June 7, 2012 (upper left).
The initial divergence as highlighted in the chart above shows that gold and equities had a wide spread with no indication of economic problems and the proverbial “risk on” trade that was initiated by the Federal Reserve under Alan Greenspan could continue for some time. There was no reason to invest in gold as the economic perception was that there was not a detectable economic emergency or crisis. That false perception changed after the collapse started in February 2007 as gold climbed sharply only to end the divergence in the summer of 2008 where everything started to collapse. After the reflation trade of 2009 began with the Fed’s QE1, the GLD (aka gold) led the S&P 500 until the summer of 2011 where the second major break in the chart pattern occurred. This break was due to the Federal Reserve’s half measure known as “Operation Twist” where as gold was predicting a massive Quantitative Easing program which never happened.
Read More @ JohnGaltFLA.com

NAPOLITANO: Big Brother’s all-seeing eye

By Andrew P. Napolitano, The Washington Times:
For the past few weeks, I have been writing in this column about the government’s use of drones and challenging their constitutionality on Fox News Channel, where I work. I once asked on air what Thomas Jefferson would have done if – had they existed at the time – King George III had sent drones to peer inside the bedroom windows of Monticello. I suspect Jefferson and his household would have trained their muskets on the drones and taken them down. I offer this historical anachronism as a hypothetical only, not as someone who is urging the use of violence against the government.
Nevertheless, what Jeffersonians are among us today? When drones take pictures of us on our private property and in our homes and the government uses the photos as it wishes, what will we do about it? Jefferson understood that when the government assaults our privacy and dignity, it is the moral equivalent of violence against us
Read More @ WashingtonTimes.com

Hugo Salinas-Price Wants Greece And Mexico Back On A Silver Standard – Can It Happen?

by Simit Patel, Seeking Alpha:
Billionaire and hard money advocate Hugo Salinas-Price was recently on the Keiser Report advocating Greece to return to a silver standard, laying forth a five step plan for how this could be accomplished. Here is the video clip; fast forward to 13 minute mark to get to the discussion about returning to the silver standard.
Here are the basic points Salinas-Price makes:

1. The optimal time to introduce significant monetary reform is when a collapse is under way.
2. Greece should exit the Euro and issue return to the drachma as a fiat currency.
3. Greece should also issue silver coins with no listed monetary value; rather only the weight is inscribed on it. Salinas-Price offered an example of a coin that was simply 1/3rd ounce of silver.
Read More @ SeekingAlpha.com

The Last, Desperate Acts

from TF Metals Report:

The foolish, self-destructive Bullion Banking Cartel continues to crush and manipulate the price of paper metal. Their arrogance will be their undoing.
First things first. As you all know by now, paper price was crushed last night/earlier today. $23 was taken out in under a minute. This was nothing but regular, Cartel price manipulation where bids are pulled coincident to sell orders being placed. As usual, they got away with it. This time, however, we were watching and two, separate Turdites caught them in the act. Here is a C&P of an email I received last evening at 10:50 EDT, 30 minutes after the “event”.
Turd,
I was watching gold sell off tonight, wondering how low it would go.  Then I saw the spike down.  On my depth of market order entry application (NinjaTrader), there was absolutely no bids or ask in the system.  So I placed a limit order quickly at 1567.  There was a long pause, but then my screens came back to life and suddenly the price slipped all the way down to 1556.  I was pissed because I thought I was filled at 1567, but my long of 6 /GC contracts was filled at the absolute bottom 1556.4.
This almost conclusively proves to me that liquidity (bids) was purposely removed.  How did I get filled at the absolute bottom?
Read More @ TF Metals Report.com


Who will be next?

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